The following outline of three lectures given by Simon Newcomb at Harvard in December 1879 was found in a grab-bag folder of undated course material from the department of economics. A quick plunge into the online newspaper archive newspapers.com was enough to find a public announcement of the lecture to nail down the date.
One of the missions of Economics in the Rear-view Mirror, is to enter such obscure artifacts into the digital record. For fun I try to imagine Newcomb giving a TED talk…or a TikTok dance video.
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Simon Newcomb’s Methodenstreit with Richard Ely in 1884 has been transcribed and posted earlier.
Links to works by Simon Newcomb can be found at The History of Economic Thought website.
Newcomb’s 1909 obituary in The Times provides a snapshot of his life.
The biographical memoir written by W. W. Campbell for the National Academy of Sciences in 1916 is of course more complete.
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HARVARD UNIVERSITY.
Lectures on Taxation.
Professor SIMON NEWCOMB of Washington will give three lectures on Taxation in Sanders Theatre, on MONDAY, Dec. 8, WEDNESDAY, Dec. 10, and FRIDAY, Dec. 12, at 7 ½ P. M.
The public is invited.
AMORY T. GIBBS, Secretary
Dec. 1, 1879.
Source: Boston Evening Transcript, 2 December 1879, p. 5
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SYLLABUS OF
MR. NEWCOMB’S LECTURES ON TAXATION.
LECTURE I
The object of the course is the study of the comparative effects of different methods of raising revenue. This study is to be conducted in the same way as if the operation of natural causes alone were to be considered.
The object of taxation is the diversion of a portion of the industrial activity of the country from private to public objects.
The questions involved are not those of the absolute merits of different systems, but only their relative merits.
The expenditure of revenue is necessarily connected with the subject, because the effect of a tax depends as much upon how it is to be expended, as upon how it is to be collected.
Distribution of Indirect Taxes
Relative advantages of direct and indirect taxation.
Problem: To what extent can a tax levied on the activities of one person be transferred by him to others with whom he exchanges services?
Classification of Taxes: —
(1.) On persons.
(2.) On Production.
(3.) On accumulated wealth.
Each of these three divisions subdivided into two classes.
(α.) Taxes on totals of persons or things.
(β.) Taxes on selected persons or things.
Taxes in class (α) whether (1) poll taxes, (2) income taxes, (3) uniform property taxes, not directly transferable, but must be borne by the payers. Hence,
Class (α) includes taxes which are commonly considered direct;
Class (β) those which are indirect.
CASE I. The full amount of a tax can be added to the price of commodities when this addition causes no falling off in the demand. Digression on relations of price and demand, and the conditions on which they depend. Put,
P, the supposed price at which an untaxed commodity C, may be sold,
Q, the corresponding demand, or quantity sold at the price P in a unit of time.
ΔP, an increment of price, added on account of the tax.
ΔQ, the corresponding decrement in the quantity which can be sold,
so that at the price P + ΔP can be sold Q – ΔQ.
If ΔQ is small compared with ΔP, we may call the commodity C insensitive; if large, sensitive.
CASE II. When the demand is sensitive to a rise of price, one of two results must follow.
(α.) Production diminished till price is restored.
(β.) Price raised by only part of the tax, and the latter divided between producer and consumer. The result which must follow depends upon how far the production is monopolized.
LECTURE II.
Digression on natural monopolies with respect to the distribution of taxation under Case II. of the preceding lecture.
Tax upon gross production reducible to an income tax.
An income tax is the fairest of all, could it be fairly assessed and collected. But, in practice, the difficulty of defining aggregate income is such that this tax is most unfair.
The ultimate general effect of taxation upon industry is nearly the same on whatever articles the tax is levied. But on special classes of persons and industries the effect may be different.
In general, the person who cannot change his employment or the articles he consumes will be most affected.
In order that the equilibrium may be least disturbed, commodities which may be substituted for each other should be equally taxed.
Is there any transfer of a tax upon a commodity beyond the producer and consumer? Answer: Not in general. A tax on tobacco, for instance, is paid entirely by the consumer of tobacco.
Taxes on Accumulation.
A tax on capital would be equivalent to one on total production if adjusted, not to the capital itself, but to the income derivable from it. But our actual taxes on capital are enormously greater than if thus adjusted.
Can a property tax be transferred? The answer is dependent on the law of accumulation of capital. Ultimately the tax is paid by the community through a discouragement of saving and a consequent raising of the rate of interest.
LECTURE III.
Hints on Systems of Taxation.
Popular delusion that a tax should be capable of being evaded because those who are least able to pay can then escape. No large class of articles consumed exclusively by the poor.
(1.) The great point in which our systems of state taxation differ from those founded on Adam Smith’s first principle is that, in the latter, ability is measured by revenue, whereas we measure it by accumulated wealth.
(2.) Abroad, municipal taxes are paid by the tenants, and not by the owners. But, owing to our short leases, it is better among us that the owner pay.
(3.) Personal property should not be taxed for municipal purposes. Is right that, in levying state taxes, general ability to pay should be considered. But our attempt to collect a uniform percentage on all kinds of property from every one is a failure.
(4.) Objects of taxation should be sought for which indicate the wealth of the owner. There is no inherent necessity that taxes should be proportioned to value.
Source: Harvard University Archives. Syllabi, course outlines and reading lists in Economics, 1895-2003. Box 10, Folder “Economics, undated (5 of 5)”.
Image Source: Simon Newcomb in Leading American Men of Science, David Starr Jordan, ed. New York: Henry Holt and Company, 1910. Page 363.
